Just as I thought. From The Register…

A router designed to share broadband internet connections with third parties appears to break the terms and conditions of seven of the top 10 UK internet service providers.

Fon.com offers Wi-Fi routers for as little as €5 and encourages connection sharing in a bid to build a Wi-Fi community, but its policies could put users at odds with their providers.

OUT-LAW has examined the terms and conditions of the 10 biggest UK ISPs as rated by research firm Point Topic. Only two of the ISPs, Blueyonder from Telewest and Orange Broadband, do not ban the sharing of a connection with third parties.

Seven of the ISPs, including BT, NTL and Tiscali, ban connection sharing explicitly. One ISP, AOL, bans sharing but only if the access is sold. Fon does encourage users to charge for access.

The Fon system is designed to create an informal network of users. If you buy a Fon router you receive a username and password. If you have a Wi-Fi-enabled laptop and come into range of another Fon router you can sign on with your Fon username and password and use that internet access. If you share your Wi-Fi for free at your own home then you can use any Fon connection for free. If you don’t share your own access you can use any other Fon point for €3 per day, according to Fon. If you decline the right to have free roaming access you can share 50 per cent of the revenue generated by charging that €3 a day for your access….

En passant… Out-law is a useful website maintained by the London law firm of Pinsent Masons with tons of stuff about legal aspects of cyberspace. It’s even got an RSS feed.